Making Sense of Key Performance Indicators as a Decision-Maker

In today’s competitive business environment, consumer expectations are changing every day and innovation is happening at lightning speed. New technology is driving organizations and creating new models, and while this is exciting in many ways, it also forces businesses to continually find new strategies to stay relevant. As things continue to change and evolve, businesses must also take action to stay ahead of the curve. It is imperative that businesses constantly track and monitor their progress so they can adjust accordingly as needed. Key performance indicators or KPI’s do just that by providing measurable data that demonstrates how effectively a company is achieving its major business objectives. Businesses and organizations can use KPIs to evaluate their success and set new goals. Once these KPIs have been identified, how can companies use this information to make meaningful, informed decisions? Here are a few ways in which KPIs help companies do just that.  


One of the most important questions for any company is simply, “Are we profitable?” Every company has the goal of becoming more profitable but in order to do that, they must look at their business through a few different lenses to determine if they are profitable and why. The best way to do this is through the use of KPI’s that can track data. Here are a few ways KPI’s can be used to determine revenue: 

  • Gross and net revenues: per month, per quarter, and per year
  • Net revenue per location
  • Total expenses
  • Profit margin


With measurable data, companies can closely examine revenue-related metrics to determine if they are profitable or not. Once this data is collected, the company can then make informed decisions on how to increase revenue based on their findings. 


Every company uses several different types of marketing strategies. Each involves its own cos, yields various results, and takes different amounts of time to execute. Businesses want to make sure their marketing strategies are worth their time and investment so they might use KPIs to gather information about this. By recording and analyzing this data, companies can make more informed decisions about which marketing strategies will help grow their business. 


Businesses also need to measure the productivity of their employees. They can use KPIs to track employee efficiency, effectiveness, quality, timeliness, project performance, and more. They can use data to measure how the efficiency of certain processes produce a specific output. For example, this information could be used to make decisions regarding customer retention or sales strategies. 


The best part about making decisions based on KPIs is that the decisions are based on fact. Numbers don’t lie so numerical data is a very solid indicator of performance. Also, this visual data can easily be made visible to everyone on a team so it’s a great way to collaborate and make informed decisions as a team.